Israel and the Palestinians will reach an accord by the end of the year on declaring a Palestinian state, Israeli parliament speaker Avraham Burg said in Cairo.

"By the end of this peace track, this calendar year, there will be an agreement between Israel and the Palestinians on establishing a Palestinian state," Burg told reporters through an Israeli Hebrew translator at Cairo airport overnight Wednesday at the end of a two-day visit to Egypt.

"Israel will be the first state to recognize the Palestinian state," said the Israeli Knesset speaker who is a member of Prime Minister Ehud Barak's Labor Party and ranks third in the hierarchy of state.

Palestinian president Yasser Arafat has vowed to declare an independent state in September, even if the peace negotiations fail to result in an accord with Israel by then.

But Barak's office has said that "if a Palestinian state is created it will be the result of negotiations."

Burg said he was "completely convinced" that Israel would reach a final peace settlement with the Palestinians as it did with Egypt at the end of the 1970s.

"The two sides have chosen peace as their path and a strategic choice," he said – CAIRO (AFP)